Deductions available under Section 80D of the Income Tax Act for Medical Bills of Senior Citizen Parents

In the current Pandemic situation, taking medical insurance has become extremely important. Due to current COVID-19 situation, medical expenditures to cure diseases is now a regular expenditure especially for senior citizens. Medical expenditure also covers the hospitalization expenses for the senior citizen aged above 60 years. Section 80D of the Income Tax Act,1961 has given tax benefits of Medical insurance as well as regular medical expenditure whether incurred for himself or for his parents is allowed as deduction which will help you in saving tax. Let us discuss more about the benefit given by this section in the below paragraphs.

Overview of Section 80D of the Income Tax Act, 1961

Section 80D of the Income Tax Act 1961 provides tax deductions for medical expenditure made for the self and for his family members up to Rs. 50,000. You can claim deduction under this section on behalf of Self, spouse, children, parents, and Hindu Undivided Families (HUF). Basically, Section 80D of the Income Tax Act, 1961 deals with:

• tax deductions on medical insurance
• receive tax deductions on the payment of premium for medical insurance for yourself and on behalf of your family
• it offers deductions over and above the exemptions you have claimed Under Section 80C.

What does Medical Expenditure include as per Section 80D of the Income Tax Act, 1961?

The medical expenditure also includes the following items on which deductions under 80D are permissible:

• Medical Insurance Premium
• Preventive Health Check Up expenses and
• Medical expenses like Purchase of medicines, Doctor consultation fees and other related hospitalization expenses etc.

Eligibility for tax benefits under Section 80D:

A taxpayer can claim the deductions under section 80D of Income Tax Act 1961. The Medical Expenditure paid for the following members in a family are eligible for deductions:

• Self
• Spouse
• Children
• Parents

SECTION 80D LIMIT:

As per Section 80D, a taxpayer can claim deductions on health insurance premiums paid for eligible persons, provided deductions on expenses related to health check-ups. The overall deduction limits are as follows:

Documents required to claim Tax Deduction

The list of documents required to claim tax deduction under section 80D is not specified in the Income tax act 1961. However, it would be prudent to save documentary evidence like bills of medical expenses, medicine invoices, reports of diagnostic tests, documents regarding medical history, doctor’s prescription, etc., in case the income tax department asks you to prove the claim of your deduction.

Key Points to Remember at The Time of Purchase of Medical Insurance for Claiming 80D Deduction:

• Medical insurance premium paid for brother, sister, grandparents, aunts, uncles or any other relative cannot be claimed as a deduction for taking tax benefit.
• Premium paid on behalf of working children cannot be taken for tax benefit.
• In the case of part payment by you and a parent, both of you can claim a deduction to the extent paid by each.
• The deduction has to be taken without showing the Service Tax and Cess portion from the premium amount.
• Group Health Insurance premium provided by the company is not eligible for deduction.

Mode of Payment

For taking Deduction under Section 80D, the payment for the Medical insurance premium as well as medical expenditure should be made by any mode other than by way of Cash. (For example, A/c Payee Crossed Cheque, Demand draft, Credit Cards, Debit Cards, UPI payments, E-wallets, net banking etc.). Except Payment for Preventive health check-up (having sub-limit of Rs. 5000) can be made by way of cash.

Conclusion

In an effort to help senior citizens lead a dignified life in their old age, the government has made provisions for tax deductions on health insurance premiums and medical expenditure incurred by people aged 60 years and above (below 80 years). The current increase in tax deductions on premiums paid toward any health insurance policy for a senior citizen will prove beneficial to senior citizens as well as anyone who pays health insurance premiums on behalf of a senior citizen, say a parent or spouse.